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Appeal sends Hobby Lobby's contraceptive challenge to lower court

Hobby Lobby Attorney Kyle Duncan, second from right, and members of his team arrive at the federal courthouse in Denver on Thursday, May 23, 2013, for a full 10th Circuit hearing challenging the federal health care law. (Ed Andrieski, The Associated Press)

A federal appeals court has ruled that arts and crafts chain Hobby Lobby can proceed with its challenge of a federal birth-control mandate without being subject to fines while the case goes forward.

In its ruling Thursday, the 10th U.S. Circuit Court of Appeals in Denver said the Oklahoma City-based chain "has established a likelihood of success that their rights under this statute are substantially burdened by the contraceptive-coverage requirement and have established an irreparable harm."

Hobby Lobby, owned by CEO David Green and his family, calls itself a "biblically founded business." The company argues that businesses should have the same right to seek an exemption to the law that religious groups have if it violates their religious beliefs.

The Greens object to providing coverage for any contraceptives that would prevent implantation of a fertilized egg, comparing them to abortions.

The ruling sends the case back for further argument to the U.S. District Court for the Western District of Oklahoma, which had earlier ruled against Hobby Lobby's request for a religious exemption.

"Today marks a milestone in Hobby Lobby's fight for religious liberty," said Kyle Duncan, general counsel for the Becket Fund for Religious Liberty, who is handling the suit for the company. "This is a tremendous victory not only for the Green family and for their business, but also for many other religious business owners who should not have to forfeit their faith to make a living."

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Alisa Klein, an attorney with the Department of Justice, said she couldn't comment on the case.

Hobby Lobby faced fines of $100 per day for each employee it refused to cover beginning July 1. The company, and Mardel, a Christian bookstore chain owned by the family, employs more than 13,000.

Hobby Lobby has said fines would total at least $1.3 million per day, or almost $475 million per year.

If corporations drop employee health insurance altogether, they face penalties of $26 million per year.

More than 30 businesses in several states have challenged the contraception mandate, but Hobby Lobby's case is the first to be decided by a federal appeals court.

The U.S. Department of Justice has argued that allowing for-profit corporations to exempt themselves from requirements that violate their religious beliefs would be in effect allowing the business to impose its religious beliefs on employees.

The 10th Circuit in Denver opted to hear the case before eight active judges, not the typical three-judge panel, indicating the case's importance.

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